Skip to main content
SpringerLink
Log in

Monetary policy under fixed exchange rates: Lessons from the Netherlands, Belgium, and Austria, 1973–1992

  • Published:
De Economist Aims and scope Submit manuscript

Summary

The impact of domestic monetary policy in The Netherlands, Belgium and Austria on offsetting capital flows, interest rates and exchange rates is empirically investigated for the period 1973–1992. Offsetting capital flows are found to be incomplete for each country and lead to marginal interest and exchange rate effects only. A significant direct channel from excessive domestic creation to interest rises is present in Austria and to both interest and exchange rate rises in Belgium. No such effects are found for The Netherlands, possibly due to its adherence to targets for domestic money creation during the sample.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • De Nederlandsche Bank,Annual Report, various issues.

  • Dunnen, M. den (1992),Het monetaire beleid in België, Oostenrijk en Nederland, Studiedienstserie nr. 59, De Nederlandsche Bank, Amsterdam.

    Google Scholar 

  • Fase, M.M.G., P. Kramer, and W.C. Boeschoten (1990),MORKMON II, het DNB kwartaalmodel voor Nederland, Monetaire Monografieën 11, De Nederlandsche Bank.

  • Fase, M.M.G., and C.C.A. Winder (1990), ‘The Demand for Money in The Netherlands Revisited,’De Economist, 138, pp. 276–301.

    Google Scholar 

  • Fase, M.M.G., and C.C.A. Winder (1993), ‘The Demand for Money in The Netherlands and the Other EC Countries,’De Economist, 141, pp. 471–496.

    Google Scholar 

  • Glück, H., D. Proske, and J.A. Tatom (1992), ‘Monetary and Exchange Rate Policy in Austria: An Early Example of Policy Coordination,’ in: H. Motamen-Scobie and C.C. Starck (eds.),Economic Policy Coordination in an Integrating Europe, Bank of Finland, Helsinki, pp. 163–202.

    Google Scholar 

  • Haan, L. de, C.G. Koedijk, and J.E.J. de Vrijer (1992),De stijging van het liquiditeitsbezit in de jaren tachtig, Monetaire Monografieën 12, De Nederlandsche Bank.

  • Hochreiter, E. and B. Knöbl (1991), ‘Austria's and Finland's Exchange Rate Policy-Two Examples of a Peg,’De Pecunia, pp. 33–61.

  • Hochreiter, E. and G. Winckler (1992),Signaling a Hard Currency Strategy: The Case of Austria, Working paper 10, Oesterreichische National Bank.

  • Johnson, H.G. (1973), ‘The Monetary Approach to Balance of Payments Theory,’ in: M.B. Connolly and A. Swoboda (eds.),International Trade and Money, Allen and Unwin, London, pp. 206–224.

    Google Scholar 

  • Kouri, P.J.K. (1975), ‘The Hypothesis of Offsetting Capital Flows-A Case Study of Germany,’Journal of Monetary Economics, 1, pp. 21–39.

    Google Scholar 

  • Kouri, P.J.K., and M.G. Porter (1974), ‘International Capital Flows and Portfolio Equilibrium,’Journal of Political Economy, 82, pp. 443–467.

    Google Scholar 

  • MacKinnon, J.G. (1990),Critical Values for Cointegration, Discussion paper 90-4, University of California, San Diego.

    Google Scholar 

  • Mundell, R.A. (1963), ‘Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates,’Canadian Journal of Economics and Political Science, 29, pp. 475–584.

    Google Scholar 

  • Nationale Bank van België,Annual Report, various issues.

  • Oesterreichische National Bank,Annual Report, various issues.

  • Roubini, N. (1988),Offset and Sterilization under Fixed Exchange Rates with an Optimizing Central Bank, NBER working paper no. 2777, Cambridge.

Download references

Author information

Authors and Affiliations

  1. Rijksuniversiteit Limburg, Maastricht, The Netherlands

    Clemens J. M. Kool

Authors
  1. Clemens J. M. Kool
    View author publications

    You can also search for this author in PubMed Google Scholar

Additional information

This paper was written while the author was a visiting scholar at the Federal Reserve Bank of St. Louis. Manon den Dunnen provided excellent research assistance in collecting and summarizing available sources on actual monetary policy and instruments in Austria, Belgium, and The Netherlands. Useful comments on an earlier draft from Bill DeWald, Lex Hoogduin, Kees Koedijk, Ron van Rooden, Jack Tatom, Dan Thornton, Tom van Veen, and two anonymous referees are acknowledged. I am indebted to Paul Hilbers of the Dutch Central Bank for providing data on the exchange rate parities of the guilder and the Belgian franc during the 1970s. The usual disclaimer applies.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Kool, C.J.M. Monetary policy under fixed exchange rates: Lessons from the Netherlands, Belgium, and Austria, 1973–1992. De Economist 143, 329–351 (1995). https://doi.org/10.1007/BF01434012

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF01434012

Keywords

Search

Navigation